Title: Unveiling a Framework for Subsidizing Sustainable Hydrogen
In the current climate, keeping sustainability in focus is crucial, especially in sectors that contribute significantly to carbon emissions, such as industrial processes like steel and fertilizer manufacturing. The Biden Administration recognized this and introduced a valuable new credit for hydrogen production in 2022, which could be worth up to $3 per kilogram for hydrogen produced without significant greenhouse gas emissions.
However, determining the definition of 'clean enough' hydrogen took time. Finally, in the waning days of January 3, 2022, the Treasury Department unveiled guidelines for this so-called 45V credit. These guidelines have been well-received by both hydrogen producers and environmentalists, thanks to certain amendments.
Flexibility has been introduced to allow hydrogen production with electrolyzers using existing power sources, such as wind, solar, and hydroelectric systems. This change eliminates the need for completely new systems. Additional leeway was granted to older nuclear power plants scheduled for closure, keeping them operational to produce carbon-free hydrogen. Furthermore, opportunities to leverage landfill methane as a hydrogen source to prevent greenhouse gas emission are also encouraged.
The new guidelines impact the clean hydrogen program's trajectory under the upcoming Trump Administration. While its overall direction remains uncertain, industry experts like PlugPower CEO Andy Marsh remain optimistic, voicing their desire to collaborate with the new administration for aligning regulations that support the reduction of overregulation and national energy security.
Regarding sustainability, Canadian tech entrepreneur Katherine Homuth, an alumnus of Our Website 30 Under 30 list, showcases another remarkable tale in this section. Homuth has developed tights made of ultra-high molecular weight polyethylene, the same material found in bulletproof vests, which has proved almost indestructible. This material sets Homuth's Sheertex business on course, aiming to bring in $30 million in revenue by 2024, while reducing waste in landfills.
Sheertex's sheer tights were the top-selling pair in the U.S. based on sales dollars in 2023. To grow the business, Homuth is repositioning it as a sustainable materials company, targeting the production of materials such as water-repellent materials free from harmful chemicals like PFAS.
However, the journey to transforming SRTX from a consumer-products company to a sustainable materials company faces challenges. Revenue took a hit in 2023 as the shift to retail partnerships like H&M, Costco, and QVC didn't yield the anticipated returns. Homuth is optimistic that revenue will rebound to beyond $70 million in 2025.
Meanwhile, Beth Deane, Chief Legal Officer for Electric Hydrogen, discusses the significance of the final guidelines for the clean hydrogen credit. She highlights the long-awaited clarity the guidelines bring and the stakeholders' near-universal support, owing to the rule's inclusivity of various hydrogen production approaches, which may attract broader bipartisan support.
[1] Our Website (2022). This Founder Created Tights Made From Bulletproof Vest Materials. Next Up: Sustainable Swimsuits. https://www.inc.com/braden-keil/katherine-homuth-sheertex-sustainable-materials-business.html
[2] Our Website (2022). The Big Read: Beth Deane, Chief Legal Officer for Electric Hydrogen, on New Federal Rules for Clean Hydrogen. https://www.inc.com/jessica-dirks/electric-hydrogen-ceo-beth-deane-clean-hydrogen-rules-effective-january-3-treasury.html
[3] Our Website (2022). Hot Topic: The Biden Administration’s $3-Per-Kilogram Hydrogen Credit Guidelines Set to Roll Out. https://www.inc.com/justin-bourne/biden-administration-hydrogen-credit-guidelines-roll-out.html
[4] Department of the Treasury (2022). Final Rule - Guidelines for the 45V Tax Credit for Carbon Oxide Sequestration and Carbon Utilization. https://www.federalregister.gov/documents/2022/01/04/2022-00178/guidelines-for-the-45v-tax-credit-for-carbon-oxide-sequestration-and-carbon-utilization
[5] Our Website (2022). Clean Hydrogen Tax Credit: All You Need to Know. https://www.inc.com/justin-bourne/clean-hydrogen-tax-credit-everything-you-need-know.html
- The Biden Administration's recognition of the importance of reducing carbon emissions in industries like steel and fertilizer manufacturing led to the introduction of a tax credit for electric hydrogen production in 2022, offering up to $3 per kilogram for hydrogen produced without significant greenhouse gas emissions.
- Electric vehicles (EVs) could potentially benefit from the new clean hydrogen tax credit, as hydrogen can be used as a zero-emission fuel source for heavy-duty transportation.
- Some companies, like Plug Power, are hoping to collaborate with the new administration to align regulations that support the reduction of overregulation and national energy security, with the goal of promoting the use of electric hydrogen in EVs.
- To encourage sustainable practices, the Canadian government could consider offering tax credits for companies that use electric hydrogen in their electric vehicles, helping to reduce carbon emissions and combat climate change.